Mary Mitchelson, Acting Inspector General focused on three areas in her written testimony: ability- to-benefit testing (ATB), on-line high school diploma mills and she also added eligibility problems associated with distance education:
Remember that analysis that Project on Student Debt completed recently that showed almost 2/3 of private loan borrowers had not maximized their federal loans? Well that statistic came alive to me in the form of a call from Tom. Tom (not his real name) attends a community college in the western United States and had found me through an internet search. He thought I could help him get a private loan. I asked him to describe his current situation so that I could learn more about him. He mentioned he had received a Pell Grant and a Cal Grant but needed additional funding to cover his educational and living expenses (his school has COA of $16,000+ for students living on their own) and his Pell and Cal Grants got him about $5,000 of the way there in total.
To which the logical next question was to ask "Why not take out a Stafford loan?" Here is where it got interesting. His initial answer was a curt one "because of the red tape." Later he laid out for me the steps required by his institution to get a federal loan, which he thought would take three months from application to disbursement: